1. A person at age 30 is planning for retirement at age 60. He projects that he will need $100,000 a year until age 80. Determine the uniform annual contribution (by him and his company) needed to provide these funds. Assume that the effective interest rate is 8%/yr and the rate of inflation is zero.
2. H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,250,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,200,000 in annual sales, with costs of $1,190,000. If the tax rate is 40 percent, what is the OCF for this project.